The Era of Deglobalisation and Distrust

Here we are, it’s 2016 and we see a rise in right wing demagogues across Europe and in the United States amidst a prolonged economic downturn. Somehow it feels eerily similar to the 1930s era of the Great Depression and trade wars leading up to World War II. In some respects we do see similar tendencies: excessive borrowing and speculation leading to bubbles and defaults, money printing and currency wars, mass unemployment and destruction of the middle class, a small ruling elite, and more aggressive nationalistic foreign policy. Perhaps it shouldn't be a surprise that human nature has not changed much over a mere 86 years.

There are, however, some crucial differences from the 1930s and now. In 1930 there were only 2 billion people on the planet, today the count is 7.5 billion. Back then there were still untapped resources, e.g. plenty of easily accessible fossil fuels to dig up and burn, functioning ecosystems and a relatively stable climate. Now, we have reached peak production and headed for decline in almost all natural resources while having to adapt to a changing climate and trying compensate for lost ecosystems. In other words, the situation right now is actually far worse than it was in the 1930s in terms of real world physical conditions.

These conditions are also the underlying factors to why the global economy is tanking. Reaching a peak in energy production implies hitting a wealth peak since there cannot be any real economic growth without increased energy consumption. Since 1973, when the United States went through local peak oil, and started importing large amounts of oil from the Middle East, the world has seen what happens when peak oil is passed. The average Americans living standard has been in decline ever since and multiple wars have been waged in the interest of securing oil from the Middle East.

I understand that people are fed up with the status quo, the existing power structures, and want change. But no politician can change the fact that resources are diminishing, at most he/she can perhaps do something about the management and distribution of remaining resources. This could be done peacefully but history tells us it will most likely end up in a grab for what’s left by any means necessary. Instead of solving the problems at home many nations will probably turn outwards and try to grab other people's resources while claiming to be under attack from these “others” in form of terrorism, immigration, religious conversion etc. Well, that’s if they can afford it.

Overall, I think that the deglobalisation trend that started in 2008 will only continue, with more protectionism, stricter border controls, capital controls and failing international cooperation. And when the next major financial crisis hits there will be very little trust left in the international monetary system. Then all hell could break lose. But who knows, we cannot predict the future based on the past.